Visit http://indiaer.blogspot.com/ for complete details �� �
EARNINGS REVIEW
ICICI Bank (ICBK.BO)
Buy
Above expectations on core profits; restructuring paying off
Core performance strong; provisions decline and CASA maintained
ICICI Bank (ICBK) reported 2QFY11 net profit of Rs12.4 bn (up 19% yoy), 3%
below GSe due to MTM, though pre-provision and treasury profit was 4%
ahead of GSe. Key highlights: (1) NII was up 8.3% yoy (+4% vs. GSe) on a
10 bp qoq uptick in NIMs to 2.6% on rising CASA and asset re-pricing.
Average CASA ratio was up 200 bp qoq to 39.2% (2Q end at 44%); (2) Fees
grew by 14.6% yoy, driven by corporate and international businesses, as
retail fees were likely weak from lower mutual fund/life insurance sales; (3)
Credit grew 5.3% qoq on merger with Bank of Rajasthan (BOR), higher
retail repayments disbursements (up 50% qoq to Rs78bn) and corporate
loans (up 22% qoq); (4) NPL provisions declined 20% qoq to 1.4% of
average loans vs. 1.7% in 1Q and 2.2% in FY2010. ICBK’s gross NPLs were
up 3% qoq on the merger, but restructured loans declined 31% qoq on upgradations;
PCR was up 370 bp qoq to 68.5%; and (5) the merger with BOR
led to just a Rs1.8 bn addition to book vs. the Rs9.37 bn disclosed in March
2010, reflecting an adjustment for Rs4 bn on pension/gratuity, Rs1.4-1.5 bn
of deferred tax reversal and higher NPL coverage to 70%.
Reiterate Buy on improving RoA/RoE
We are revising our profit estimates for FY2011/FY2012/FY2013 by
6.7%/1.7%/1.1%, which factor in higher NII and fees and lower provisions
and expenses. Subsequently, we increase our SOTP-based 12-m price
target to Rs1,175 (from Rs1,090) as we roll forward BVPS by one quarter.
We retain our Buy on ICBK given reasonable valuation (2.4X FY2011E
BVPS and 26X FY2011E EPS), RoA expansion to 1.53% by FY2012 from
1.08% in FY2010 and high earnings CAGR of 28%. Our equity value would
be Rs1,245 if it was based on our March FY2012E BVPS. Key risks: (1) bulk
borrowing, (2) higher slippages.
No comments:
Post a Comment